Apple just can't seem to catch a break in 2024 – Business Insider

Apple has been hit with a slew of challenges over the past three months.
Fernando Gutierrez-Juarez/Getty Images

  • It’s been a rough start to the year for Apple, with bad news this week only adding to its problems.
  • It got hit by a nearly $2 billion fine from the EU and a reported decline in China iPhone sales.
  • Still, some analysts believe Apple could bounce back if it shifts its focus towards AI successfully.

Bad news keeps piling up for Apple.

On Monday, the European Commission slammed the iPhone giant with a nearly $2 billion fine after ruling that it restricted competition for music streaming services like Spotify.

The very next day, a report from Counterpoint Research showed that Apple’s iPhone sales in China — a major market — had dropped by 24% in the first six weeks of 2024. That also means the iPhone has been dethroned from its no. 1 smartphone spot in the country, falling behind competitors like Vivo, Huawei, and Honor.

And all this comes just days after Apple killed its long-worked-on self-driving car project, dubbed “Project Titan,” so that it can reportedly focus its efforts on AI.

This string of negative headlines has left some concerned that Apple has lost its mojo. So far, shares have dropped by about 12% this year, while the Nasdaq has gained. Plus, Apple has been taking heat for falling behind peers in its AI efforts, with the move away from Project Titan seen as a sign that it’s scrambling to catch up. And the EU also forced Apple to crack open its App Store — a move it wasn’t at all happy about and which will net it less money from developers.

“I think the last three months is as rough as it gets for Apple,” Gene Munster, a managing partner at Deepwater Asset Management, told Business Insider. “There’s a sense that their franchise is in jeopardy.”

But some analysts say Apple hasn’t lost all its luster.

“There are a lot of factors swirling around Apple today, but I do think the core of the business is fundamentally intact,” said Toni Sacconaghi, a senior research analyst at Bernstein, on CNBC’s “Squawk Box” on Tuesday. “This is a company that has two billion devices in its install base and about 1.2 billion unique users, and they have a capability to develop new products that consumers want to go and try.”

Dan Ives, a technology analyst at Wedbush Securities, concurs. He told BI that while Apple has “definitely had a few roadblocks over the course of the past couple of weeks,” he remains bullish on the company and believes it could eventually bounce back.

“Over the last decade we have been through many challenging periods in the Apple story, and we handheld investors through these stormy periods just like today,” Ives wrote in a recent analyst note. “This is no different, and in our view, brighter days will be ahead.”

After all, Apple may still have what it takes to win over consumers. Just look at the Vision Pro, Apple’s mixed reality headset which got more than 200,000 units in preorders before its official February launch and had customers queueing up to buy it.

While the $3,500 spatial computing device didn’t win over everyone — some returned it after finding its design a bit too clunky — it did demonstrate Apple still has the wow factor when introducing new products and services, which may help it in the future.

“That platform of 1.2 billion users isn’t going anywhere, and Apple has the opportunity to leverage that going forward,” Sacconaghi said on CNBC.

That doesn’t mean the road ahead is easy. With growing pressures in the hot new AI space, there have been mounting questions about whether Apple is lagging.

But Sacconaghi believes it doesn’t have to be a leader in generative AI to still win.

“Apple has this powerful install base, and the question is: can it use AI to add more value to that install base? And I think it can,” the analyst said on CNBC. While Apple has held its AI cards close to its chest so far, “We think Apple will have AI-enabled capabilities in its next phone coming out in September,” he added.

But if it doesn’t buckle down on its AI strategy, the tech titan may find it’s outdone by other major companies, noted analyst Ming-Chi Kuo wrote in a post on X, formerly Twitter.

“If Apple fails to launch generative AI services this year that are better than market expectations, Nvidia’s market value will most likely surpass Apple,” Kuo said.

Apple didn’t respond to a request for comment from Business Insider before publication.